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Sunday, 9 August 2015

Stories we should be thinking about

A few finance and related stories we need to be thinking about before Monday morning:

Macro matters:

Going to be a busy week in Greece as noted here (stop press: now talk of substantial agreement, although not all believe it will be successful - link here).

'Greek government officials discussed a draft of the
country's third bailout agreement drawn up on the basis of discussions with
EU/IMF lenders, a government official said on Saturday, boosting hopes a deal
could be wrapped up in days. Athens is
racing to wrap up the bailout agreement of as much as 86 billion euros by as
early as Tuesday in a bid to get the first disbursement of aid by August 20,
when it faces a debt payment to the European Central Bank'

Meanwhile Portugal have been cautioned by the IMF about their debt sustainability (link here - paywall). Very akin to the Friday story I linked to here with this worrying chart:

'the market assumption of a February 2016 hike seems to us
the very earliest policy could be tightened. By the BOE’s own admission, CPI
will still likely be below 1% in February, a level that would require the
governor to write a letter explaining why inflation has undershot. To decide to
raise interest rates while writing that letter would seem a little incongruous'

Good observation via @Eurofaultlines:

The 1 year real lending rate adjusted for PPI in China is ~10%, a big hurdle given the high NFC debt load and high capex intensity

The weekend's Chinese export numbers were not so great too. Makes you wonder if the yuan is too strong (I used a not dis-similar argument in this week's Financial Orbit Speaks re the global problems of the strong US dollar regime - see here)...

'Wages and salaries are barely keeping up with inflation, real household incomes are down 8.5% since 2000 and state and local government taxes and spending are rising at twice the rate of inflation'

Amazing change in TV watching especially by the younger age groups...

'Iran’s economy is larger than Australia’s and twice as large
the UAE'. Interesting to remember this when reading this report titled 'Europe must wake up before Iran falls into the arms of
Russia and China'

5 obstacles/facts about the current Trans Pacific Partnership agreement which is struggling to be signed. Link here.

'The benefit is large and positive in many places in the west
because the western electricity grid is relatively clean – primarily a mix of
hydro, nuclear, and natural gas...The benefit is large and negative in many places in the east
because the eastern electricity grid primarily relies more heavily on coal and
natural gas'

Talking about new technology, this was really great on self driving cars...and how they can drive new business, change our work/life patterns and spark debates.

Company-related observations:Interesting stories in the weekend press about potentially more RBS shares up for sale this year and Tesco moving closer to selling some of its Asian units (to help augment its debt position).

(h/t @fletcherr)

Interesting and surprising: 'The percentage of eligible users who use Apple Pay dropped from Q1 to Q2 of this year, according to a new installment of the PYMNTS.com and InfoScout Apple Pay Adoption Tracker ' (link here)

I enjoyed reading this report by @UKValueInvestor on Royal & Sun Alliance titled 'How to escape a value trap by waiting for an acquisition bid'. Funnily enough I also sold my RSA shares this week (at a profit).

The Wall Street Journal reported on Saturday, Berkshire is
close to buying Precision Castparts, a nearly $27 billion industrial company. Some good background here. As noted by @PreetaTweets '

Berkshire's largest deal to date is the $26b BNSF buy.
Precision Castparts' market cap is $27b, so deal value wd make it Berkshire's
largest'

(well 'the device only works in a controlled environment with magnets running underneath the surface of the skatepark. The device combines the effects of liquid nitrogen-cooled superconductors and permanent magnets to float above the ground')

Meanwhile this list of seven summer reads is going to be hard to beat I believe.